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Market Monitor, Monday, 01/30/2006

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OI Technical Staff : 1/30/2006 9:59:59 PM

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QQQQ flatlining into the close, but GOOG earnings after the close should be good for a move. Link

Jeff Bailey : 1/30/2006 3:50:14 PM

AMR Corp. (AMR) $22.36 +10.80% ... surging toward the close.

Jeff Bailey : 1/30/2006 3:45:14 PM

02:12 PM EST Temperatures with March Nat. Gas and Heating Oil settlements at this Link

March Unleaded settled up $0.0321, or 1.77% at $1.8421.

March Crude Oil settled up $0.59, or 0.87% at $68.35.

Jonathan Levinson : 1/30/2006 3:28:51 PM

BOSTON (MarketWatch) -- Funds that invest primarily in U.S. stocks posted net outflows of $2.18 billion in December, versus inflows of $9.23 billion the prior month, the Investment Company Institute reported late Monday. Conversely, portfolios that primarily hold foreign companies saw inflows of $12.28 billion, holding steady from November's $11.79 billion take. The exodus from bond funds continued, as investors pulled $2.71 billion after they withdrew $324 million the previous month. Total mutual-fund assets in the U.S. rose $138.9 billion, or 1.6%, to $8.906 trillion in December, according to the ICI, the main trade group for mutual funds.

Jonathan Levinson : 1/30/2006 3:21:36 PM

Session lows for the Qs, back to the pivot and this morning's support. Link

QQQQ's daily chart shows its first preliminary uptick in the daily cycle indicators, still on light volume but price is in line to print its third consecutive session of higher-low, though the higher-high is far from a done deal here: Link

QQQQ to a new session high, now 7 cents away from Friday's high. The move is steeper than the drop that preceded it, but again, the volume's not there. Link

Jonathan Levinson : 1/30/2006 1:30:37 PM

QQQQ has traded less than 3M shares in the past half hour, and I'd ascribed no more significance to the tape here than to any afterhours session. The last 30/60 min channel breach only yielded a corrective sideways downphase, and so far that's all we're seeing off the 42.31 high of the day. Link

The 37B in 13-week and 26-week bills was taken up by indirect bidders in the amount of 8.33B. The high-rte on the 13-week bills was 4.375%, the yield 4.485% and the bid to cover just 1.87. On the 26-week bills, the high-rate was 4.435%, the yield 4.6% and the bid to cover ratio 1.94. Currently, ten year note yields hold a 3.6 bp gain at 4.539%, the 13-week rate +1.5 bps at 4.352%.

Back. There was a small burst of volume on the pop to the high, but it remains an extremely light day for QQQQ- at 33M shares, this is what we'd normally see after the first hour and a quarter. The 13- and 26-week auction results are due in a few minutes and could get things moving a bit. I'm more bearish than bullish at current levels, with Friday's spike high not yet tested. Link

Jeff Bailey : 1/30/2006 12:35:32 PM

InSteel Industries (IIIN) $25.74 +2.54% Link ... Company said earlier this morning that it has repurchased approximately 400,000 shares of its common stock held by Board chairman Howard Woltz, Jr and his wife in connection with its previously reported stock repurchase program. The purchase price for the shares repurchased from the Woltzes was $21.322 per share based on a predetermined formula.

Volume has dwindled off to a crawl. QQQQ is holding its narrow range within what is either the bull flag near the end of a bullish cup and handle, or within a complex/patternless top. The intraday cycles look more bearish, but the daily cycle could support an upside launch from here. It looks like a 60 cent range from 41.80-42.40 for the daily cycle, while intraday, 41.10 is becoming key support, with short cycle channel support just below it at 42.00. 15 min chart of QQQQ at this Link

Just checking in again to see that the TRAN did power right up to the envelope resistance shown on the chart linked to my 9:49:04 post. It hit a high of 4356.25, piercing that envelope by a few points, but it's now fallen back to 4340.30, as I type. It hasn't fallen back far enough to be sure that it's given up the effort to climb, but this should be tough resistance. Nothing is holding long as resistance these days, but this envelope usually does for the TRAN.

Last week's other front-runners show mixed reactions. The SOX did close a 60-minute period below first Keltner support, now at 550.44-552.57, but not below the next layer at 546.12-547.12, and its pullback into the Friday morning gap still looks bull flaggish, so there's a mixed picture. The RUT trades sideways, holding above the 730 area, and thickening support down to 726.51.

So, there's a mixed picture with the SOX having Friday approached one extrapolated Fib target, the TRAN today having approached weekly resistance that has always held for the TRAN for the last eight or nine years and the RUT at a new high. None effectively retreat from resistance, but continue to keep a watch on the TRAN and SOX, especially.

I'm off again. I'm not trading today, other than guarding threatened credit spreads.

Jonathan Levinson : 1/30/2006 11:49:31 AM

Volume breadth creeping higher again, now +1.15:1 on the NYSE, +1.8:1 on the Nasdaq.

The Treasury will auction 4-week Treasury bills totaling $18,000 million to
refund an estimated $8,000 million of publicly held 4-week Treasury bills maturing
February 2, 2006, and to raise new cash of approximately $10,000 million.

Jonathan Levinson : 1/30/2006 11:22:50 AM

Back to find QQQQ still testing the pivot, now in a short cycle downphase, the 30 and 60 min channels sliding sideways. NYSE volume breadth has ticked negative while the Nasdaq holds +1.75:1. The 72 SMA has made it up to the pivot, a break below which will restore a bearish bias for the 30 min cycle, but so far it's a very light volume, slow session. Hopefully we'll get some movement before the FOMC announcement tomorrow afternoon. Link

Abbas to Meet with Hamas Within 2 Weeks ... AP - Palestinian leader Mahmoud Abbas said he planned to meet with leaders from Hamas in the next two weeks to discuss forming a new government in the wake of the Islamic radical groups landslide election victory.

Despite the victory of Hamas, which doesn't recognize Israel's right to exist, the Palestinians remain committed to the peace process with Israel, Abbas said he told German Chancellor Angela Merkel.

Jonathan Levinson : 1/30/2006 10:43:37 AM

Stepping away for a few minutes.

Jeff Bailey : 1/30/2006 10:39:06 AM

Dallas Fed January Mfg. Production Index ... 45.3 vs. December's 7.9.

January Business Activity 35.5 vs. December's 37.3.

Jonathan Levinson : 1/30/2006 10:32:07 AM

Session low for QQQQ here. It could be a bull flag, or a small bearish triangle above the pivot- it's too close to call. Link

Lowrance Electronics (LEIX) $36.67 +46.68% Link ... Maker of sound navigation and GPS products agreeing to be acquired by marine electronics company Simrad Yachting AS in a deal valued at $215 million, or $37 per share.

Jonathan Levinson : 1/30/2006 10:25:23 AM

Crude oil gets back to positive territory here, +.05 at 67.80. 30-tick chart at this Link

Talks between Iran and European nations made little progress Monday in ending the diplomatic standoff over the country's nuclear program, a U.K. official said.

"To be frank, we didn't detect anything new in their approach," said John Sawers, a senior U.K. official at the talks.

Jonathan Levinson : 1/30/2006 10:16:24 AM

So far, the retest of Friday's high and subsequent pullback looks like a 60 min channel top, which is what the oscillators are saying. But it's dangerous for bears so long as price holds above the 72 SMA at 42.02, as the 30 min cycle downphase is faltering early in its run. Patternwise, it could be a bull flag printing today- direction is still up for grabs. Link

Volume breadth down to +1.35:1 on the NYSE, +1.95:1 on the Nasdaq, still strong.

Jeff Bailey : 1/30/2006 10:02:01 AM

Mattel Inc. (MAT) $15.63 +5.75% Link ... Reported Q4 EPS of $0.58 per share, excluding non-recurring items, which was well $0.09 better than concensus of $0.49 per share. Revenues were down $0.4% year-over-year to $1.84 billion vs. consensus of $1.89 billion. Company announced it will boost its stock buyback program by $250 million.

Thanks, Jonathan. I couldn't resist a few comments, but I have to dash off now.

Linda Piazza : 1/30/2006 9:55:03 AM

I've got to go now, but the SOX is dropping. It has not yet closed a 60-minute period below the Keltner line currently at 549.89, of course, and there's Keltner support at 545.29-547.19, so you can still believe only half of what you're seeing. The SOX still essentially coils. It meets some parameters for a pullback now, but there's Keltner and gap support below the SOX and it hasn't had time yet to confirm even the merest of signs that the short-term trend is changing. It probably should reverse, but it should have reversed when it produced that third gap higher in its climb, back a big number of points ago.

Jonathan Levinson : 1/30/2006 9:52:34 AM

Great to see you, Linda!

Jonathan Levinson : 1/30/2006 9:52:07 AM

The USD Index holds a narrow range at the top of Friday's big gain, so far finding support at its 22 day EMA. Daily chart of the DX March future contract at this Link

Linda Piazza : 1/30/2006 9:49:03 AM

The TRAN charges up toward 4350.19 envelope resistance on a weekly chart. Other than a short period intra-week, the TRAN has never violated this envelope during the time QCharts has data for it. It pulled back from this envelope several times since 2004. Guess there's a first time for everything, but watch: Link

Jonathan Levinson : 1/30/2006 9:47:30 AM

Volume breadth has strengthened to +1.5:1 on the NYSE, +2.2:1 on the Nasdaq.

Linda Piazza : 1/30/2006 9:43:21 AM

The OEX's 61.8% retracement of the decline off the 1/11 high into the 1/25 low is at 581.72. The OEX is currently above that now, at 582.16, but a pullback on this 60-minute candle could leave only a shadow above it. There's 60-minute Keltner resistance at 582.53, but the OEX needs to close a 60-minute period below the Keltner line currently at 579.76 before it even begins to change its trend, either. That 61.8% retracement is important.

Jeff Bailey : 1/30/2006 9:42:17 AM

Qatar Oil Minister ... DJ - May be an OPEC output cut at March meeting.

Confident there is no shortage in oil market.

Agrees $50/Bbl oil may trigger OPEC cut.

Analysis point to $1.5 million B/D Q2 oversupply.

Linda Piazza : 1/30/2006 9:40:56 AM

The SOX needs to close a 60-minute period below the Keltner line currently at 549.90 before it even begins to change its trend. SOX at 552.13 as I type.

Jonathan Levinson : 1/30/2006 9:40:31 AM

This move for QQQQ seems to be a short cycle upphase only, fighting the rolling 60 min channel. However, if the bulls can hold up here for another half hour, it will whipsaw the 30 min cycle downphase and also, in process, start generating signs of daily cycle strength. So far, Friday's high is being tested but not yet broken. Link

Linda Piazza : 1/30/2006 9:39:17 AM

Stopping by again. I said in last Wednesday's Wrap to believe only half of what you see for the next week, and I meant it. I personally won't be entering any new directional plays until after the FOMC meeting. This morning, the SOX's open fulfills one parameter for a possible reversal after Friday's doji after a gap. The SOX opened slightly below Friday's close. Friday's doji on high volume and yet another gap after several others doesn't look like normal bullish behavior, and traders should keep a watch on the action this morning, but even now, the SOX is trying to climb. As Mark pointed out on Friday, we had a week that ended with a strong candle on many indices after producing a confirmed reversal signal on many indices. Technical analysis is not working right now, except that it's working to tell you that it's not working! Anyone looking at GOOG's chart can find many a gap higher that produced a doji sitting all by itself, only to see GOOG maybe consolidate a day and maybe not even that before resuming the climb. So, don't count on any reversal in the SOX, but watch.

WASHINGTON - Consumer spending rose at a rapid pace in December, far outpacing income growth, a development that helped to push the savings' rate for the year down to the lowest level since the Great Depression.

The
Commerce Department said Monday that consumer spending rose by 0.9 percent in December, more than double the 0.4 percent rise in incomes.

To finance the increased spending, Americans dipped further into their savings, pushing the savings rate for all of 2005 into negative territory at minus 0.5 percent. That was the lowest annual savings rate since a decline of 1.5 percent in 1933, a year in which the country was struggling to cope with the Great Depression.

Hi Jon, looks like it is going to be a couple of boring days until
the fed meets. Bonds sure are acting strange lately. Your thoughts
please.

I recall having read somewhere over the weekend that this is historically "an exciting" week, but I didn't dig deeper than the subheadline and don't know the basis for the statement. There's a ton of data this week, including the FOMC policy announcement, and the fact that the Fed began letting the stopout rate on its repo money rise last week suggests that we'll be getting the 1/4 point hike that most are expecting. Overall, the daily cycle has turned up for the ten year yield- more in tonight's Market Wrap. Link

Jane Fox : 1/30/2006 9:21:46 AM

Dateline WSJ Exxon Mobil's fourth-quarter profit rose 27% to more than $10 billion, a record for the company and one of the highest quarterly totals ever posted, as the giant continued to reap a windfall from high oil prices.

Jeff Bailey : 1/30/2006 9:13:20 AM

Program Trading Levels for Monday ... HL Camp & Company has their computers set for program buying at $+4.66 and set for program selling at $+2.44.